INFINZ Journal December 2021

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THE JOURNAL FOR THE FINANCE AND CAPITAL MARKETS INDUSTRY

December 2021

THE JOURNEY BEGINS Lessons from early adopters of climate reporting

EXPERT INSIGHT Analysis of recent market activity

EYES ON THE PRIZE

Changes to the annual INFINZ Awards

PLUS FULL COVERAGE OF THE 2021 INFINZ CONFERENCE

THE START-UP GUY Rob Everett’s parting thoughts on his FMA tenure


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IN-DEPTH JOURNALISM

EXPERT ANALYSIS

The story behind the story.

What it means for New Zealanders.

INFORMED OPINIONS

WORLD NEWS

Reaction and perspective.

From our global partners.

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Herald Premium inf in z . c o m


CO N T E N T S

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IN THIS ISSUE 2 EXECUTIVE DIRECTOR’S CONTRIBUTORS Editor CAITLIN SYKES Sub-editor TRISH HEKETA Project Manager AMANDA TRAYES Art Director ALICE BELL Publisher S UGAR BAG PUBLISHING LTD www.sugarbag.co.nz Executive Director JIM McELWAIN, INFINZ

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Climate-reporting journeys shared at a July event

CHAIR’S LETTER

18 EQUITIES

4 TAKING LEAVE

22 MARKETS REVIEW

board members

Sponsorship and Advertising BERNICE ARCHER, INFINZ

the sustainability shift

All rights reserved © 2013 | ISSN: 1176-7219. Published by Sugar Bag Publishing Ltd. The INFINZ Journal is produced twice yearly for the Institute of Finance Professionals NZ Inc (INFINZ). The views expressed in the articles are those of the contributors and do not necessarily reflect the views of INFINZ or Sugar Bag Publishing Ltd. No part of this work may be reproduced in any form by any means without the written permission of the publisher. Any unauthorised use of this publication will result in immediate legal proceedings. Every care has been taken to ensure the accuracy of the information in the INFINZ Journal. Neither INFINZ, the publishers, authors, nor their employers can be held liable for any inaccuracies, errors or omissions. Readers are strongly advised to contact their professional financial adviser before buying or selling securities.

25 A PRACTICAL APPROACH A new masterclass series will help members get hands-on with

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climate-related disclosures

The latest activities from the

26 CFA SOCIETY NEW ZEALAND

YFP, YWF and ELG groups

Developments in ESG investing

12 THE START-UP GUY

and the key considerations in this

Rob Everett shares his parting

growing field

thoughts after seven years at

28 INTO THE LIMELIGHT

the FMA

A fresh take on the INFINZ Awards

15 ACTION STATIONS

in their 20th year

Governance and risk management

31 BUILDING BLOCKS

perspectives on climate-related disclosures

Comprehensive coverage of the 2021 INFINZ Conference

December 2020

sustained response Insights on a more sustainable, productive and inclusive future

shining a light

Institute of Finance Professionals NZ Inc (INFINZ) PO Box 237, Martinborough, 5711 Phone: +64 6 306 6303 Email: mail@infinz.com | infinz.com

THE JOURNAL FOR THE FINANCE AND CAPITAL MARKETS INDUSTRY

next StePS

Creating a more sustainable financial system

freSh taLent

Meet the winners of the 2020 INFINZ Awards plus full coverage of the 2020 infinZ conference

SUBSCRIPTIONS

Gearing up to report on climate risks

keeping connected

FORWARD THINKERS

June 2021

CLimate of Change

Analysis of recent market activity

Adding value in new ways

ross pennington | 2020 INFINZ Distinguished Fellow

the past six months

Will Goodwin reflects on leading

THE JOURNAL FOR THE FINANCE AND CAPITAL MARKETS INDUSTRY

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A look at debt capital markets in

5 SUSTAINABILITY AT THE CORE Advocacy Committee chair

Produced by Sugar Bag Publishing Ltd E: amanda@sugarbag.co.nz M: 021 478 461

Brandon Tai reviews NZX activity

A farewell to retiring INFINZ

Admin. Manager IONA GIBBS, INFINZ

INFINZ JOURNAL DECEMBER 2021

16 LIVE THE CHANGE

LETTER

Introducing new young leaders in the INFINZ community

PLUS the latest aNalysIs oF receNt market actIvIty

PLUS Full coverage oF the 2019 INFINZ awards

catherINe savage catherINe savage | | Chief Economist Northern 2021 INFINZ Trust and 2020 INFINZ Distinguished Fellow Conference speaker

Foundations For success

$40 + GST/two issues or $25 + GST/single issue for non-members

Meet the winners of the 2021 INFINZ Awards

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EXECUTIVE DIRECTOR’S LETTER

A BRIGHTER FUTURE Members’ continued support of INFINZ throughout the ongoing challenges of this past year has been hugely appreciated, says executive director Jim McElwain. AS WE COME TO the end of another year significantly impacted by the pandemic, I’d like firstly to acknowledge the challenges that our members and wider communities have continued to experience. It has been a climate in which attending to ‘business as usual’ has been tough, let alone continuing to progress important agendas in the finance community, such as tackling entrenched sustainability and productivity issues. Through all of this, our members’ continued support of INFINZ has been hugely appreciated. We are thrilled that in this challenging year our membership has continued to grow – up from 1856 in January to 1987 at the most recent count. Despite Covid-19 impacting on our ability to hold many of our events in person, particularly in the second half of 2021, we’ve remained focused on providing value to members. Sustainability in finance, particularly its role in helping New Zealand to meet its zero-carbon aspirations by 2050, is a major focus for the sector and has featured prominently in our programme of events. Legislation that has just been enacted, for example, will usher in a mandatory climaterelated financial disclosures regime. This will require large listed companies and financial institutions to report on climate-related risks to their operations, and their responses. In the lead-up to this we have run several events exploring various aspects of the regime, including highlighting the experiences of organisations already on the climate-reporting pathway. You can read more about our Auckland event in July (pages 16–17), at which speakers from the NZ Super Fund and Genesis Energy shared first hand their insights into this space. To further assist with education on climaterelated disclosures (CRD), we recently launched a new CRD programme that will run as a series of masterclasses in February and March next year.

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It will comprise four sessions exploring issues of risk identification, resilience – including scenario analysis – and strategy and targets. Balancing our need to build a more sustainable, productive future with more immediate requirements to rebuild our economy as we recalibrate from the impacts of Covid-19 was the focus of our annual conference in October. I’d like to acknowledge the hard work and dedication of INFINZ staff in delivering another highly successful conference, as well as our busy wider events programme. These include Rose Bridge, who has joined us as our new events coordinator, having in the past run her own successful events business. Bernice Archer has recently been promoted to events and partnerships director. This move reflects the ever-growing importance of our partnerships with our reference groups, sponsors and partners, and her significant contribution to INFINZ. And Iona Gibbs, who has assisted many of you with membership enquiries and awards and conference bookings, continues her wonderful work as our administration manager. At the end of another challenging year, I hope you all have an opportunity to pause, rest and recharge over the Christmas/New Year period, and I look forward to connecting with you again in 2022.

I’D LIKE TO ACKNOWLEDGE THE HARD WORK AND DEDICATION OF INFINZ STAFF IN DELIVERING ANOTHER HIGHLY SUCCESSFUL CONFERENCE, AS WELL AS OUR BUSY WIDER EVENTS PROGRAMME.

Ngā mihi Jim McElwain Executive Director, INFINZ exec@infinz.com

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CHAIR’S LETTER

THE PATH AHEAD INFINZ chair Mark Edwards views with a sense of pride the inclusive environment that INFINZ continues to provide. IT’S BEEN A YEAR since I took on the role of INFINZ chair, and the climate in which we’re all operating seems just as uncertain now as it was then. However, I reflect on this time with pride. Throughout almost two years of disruption, INFINZ has provided members with a safe, connected, diverse and inclusive environment, whether online or in person, in which to develop and grow. The organisation has also continued to grow. Our robust 2020/21 financial performance has offset losses made in the previous year. And total membership increased by almost 11 per cent over the two years to 30 September 2021. We had more than 660 registrants to the online 2021 INFINZ Conference, and attendance at the awards dinner in May – more than 750 people – approached pre-pandemic levels. May 2022 will mark 20 years since the formation of INFINZ, following the merger of the NZ Society of Investment Analysts and the Society of Corporate Treasurers. In 2002 the benefits of the merger were stated as “members will be better served by a body that will focus upon the industry in which they work, rather than serving the narrower interests of career groupings”. More than half of INFINZ’s total membership now comprises corporate financiers, other service providers, students, lawyers and public servants. In July this year the board undertook a strategy review and wished to affirm INFINZ as a body that embraces finance professionals beyond those directly engaged in the wholesale financial and capital markets. The board, therefore, adopted the following statement of purpose: “The Institute of Finance Professionals New Zealand Inc (INFINZ) is an individual member-based organisation for professionals in finance roles and those working in New Zealand’s financial sector ecosystem.

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Our mission is to empower a more prosperous, inclusive and sustainable New Zealand by improving the capability and effectiveness of the financial sector ecosystem and its members within it”. To reflect this statement, I expect more members will be able to receive Certified Membership status, which will allow them to vote at AGMs and stand for the INFINZ board. At the 2020 AGM it was asked if non-certified members should also be able to vote at  member meetings. We intend to consult on this proposition in the new year, so any changes can be implemented for the 2022 AGM. The board also recently announced a refresh of the annual INFINZ Awards programme. This has resulted in some new awards, as well as changes to existing awards, and the retirement of others. For more details, see page 28. I’d like to acknowledge the efforts of the entire INFINZ board, management and staff in achieving all the work I have outlined while navigating challenging times. I’d particularly like to thank retiring board members Ross Pennington, Kim Martin and Imogen Swain (YWF board observer) for their significant contributions. And last but not least, a big thank you to all our members, sponsors, and many volunteers, including our reference group members on the YWF, YFP, and ELG boards, mentors, speakers, awards judges and those assisting our advocacy efforts.

INFINZ HAS PROVIDED MEMBERS WITH A SAFE, CONNECTED, DIVERSE AND INCLUSIVE ENVIRONMENT ... IN WHICH TO DEVELOP AND GROW.

Ngā mihi nui Mark Edwards Chair, INFINZ

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B OA R D C H A N G E S

TAKING LEAVE A farewell to retiring INFINZ board members.

ROSS PENNINGTON

KIM MARTIN

INFINZ BOARD MEMBER Ross Pennington

“THE PLACE OF THE FINANCIAL SYSTEM IN DELIVERING ON A TRANSITION TO A MORE SUSTAINABLE AND JUST ECONOMY HAS BEEN GIVEN GREATER RECOGNITION – A PROCESS THAT IS JUST BEGINNING.”

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is stepping down from the role after being on the board for eight years. The INFINZ Distinguished Fellow also chaired the Advocacy Committee, which advocates on behalf of INFINZ members to legislators, regulators and other professional and industry bodies. When Pennington began that role, the market was heavily devoted to designing and implementing the FMCA – a once-in-ageneration reform of our securities laws. Since then, the lens has extended to the shape of the overall financial system through the ‘Phase 2’ RBNZ review, which he describes as “another tectonic shift”. “At the same time, the place of the financial system in delivering on a transition to a more sustainable and just economy has been given greater recognition – a process that is just beginning,” he says. The advocacy function of INFINZ has a refreshed strategy to match these priorities, and a new, bigger team – led by fellow INFINZ board member and NZ Super Fund head of direct investments Will Goodwin – to shoulder the responsibility. Throughout much of his time as a board member, Pennington was a lawyer. He now works with fintech firm PowerFinance, while also focusing on ESG financing and providing specialist advisory services. He was also co-chair of the Sustainable Finance Forum as it transitioned to the establishment of Toitū Tahua: Centre for Sustainable Finance.

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Pennington says his time on the INFINZ board has been a period of enormous and positive change for the organisation. Standouts include the passion and engagement seen in INFINZ’s rapidly growing and diverse member base, especially through the YFP and YWF groups. “Those initiatives, driven by those members, have helped us to up our game in mentoring, education, forums, networking, advocacy and everything else we do,” he says. Pennington wishes to pay special tribute to the current board, which is dedicated to taking the organisation and the industry to the next level. He says he will remain active within INFINZ, particularly on initiatives giving voice to younger members of the profession and those bringing together the diverse participants of the financial system to advance the sustainability transition.

KIM MARTIN While Kim Martin is stepping down from her role on the INFINZ board, strong connections to the organisation will remain. “I really value the breadth of the INFINZ membership, which spans the entire financial sector ecosystem,” says Martin, who is head of funding strategy and engagement at New Zealand Debt Management. “I’ll continue to take advantage of educational opportunities offered and be a regular participant at the annual conference and awards. “I’ve also been acting as an INFINZ mentor for six years and I very much intend to continue as I really love the programme. It’s allowed me to meet such a diverse and motivated group of young people at different stages of their careers, and I’ve also learnt a lot about the financial sector beyond my own areas of expertise – from startups to regulation.” Martin joined the board towards the end of 2018 and the ensuing period, particularly the past 18 months, has been a time of intense and ongoing disruption. But she says INFINZ has shown great adaptability and innovation in challenging times, including continuing to expand its core educational, networking and advocacy initiatives via virtual platforms.

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A DVO C AC Y

SUSTAINABILITY AT THE CORE “INFINZ has continued strong growth in its membership during this time, despite fewer face-to-face events. That said, when in-person events have been possible, such as this year’s INFINZ Awards dinner, I’ve noticed the vibrancy and appreciation of being able to get together in person,” she notes. “At a governance level, it’s been important to have contingency plans agreed to allow nimble decisions when required,” she adds. “This has also reminded me of the importance of getting the basics right, even in unusual times, and not forgetting the core aspects of governance while developing an adaptable strategy.” One of Martin’s aspirations when joining the board was to support and develop the YWF group. She says it’s been encouraging to see the growth in the female membership of INFINZ, particularly in the younger cohort. “The Wellington chapter of YWF was launched in March 2019 and I’ve really enjoyed observing the group’s energy. “A particular highlight for me was participating in a panel discussion arranged by the group earlier this year, when I joined colleagues from the RBNZ and the FMA to speak about the opportunities for careers in financial markets in both the private and public sectors, alongside life’s other aspirations.” Martin is looking forward to Wellington’s first face-to-face event in the new year, where she will be interviewing Leilani Frew, deputy secretary of financial and commercial at the Treasury, about her views on capital markets and infrastructure on both sides of the Tasman. “And hopefully I’ll have plenty more opportunities like these to remain connected,” she says. The INFINZ board would also like to acknowledge and thank former YWF Auckland executive director Imogen Swain for her contribution during her time as a board observer, and welcomes current YWF Auckland executive director Jennifer Chee as she moves into the observer role. n

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INFINZ Advocacy Committee chair Will Goodwin, head of direct investments at the NZ Super Fund, reflects on leading the sustainability shift. WITH THE CONFLUENCE of so many factors impacting the decisions of finance leaders, the need to step back and take a strategic view has arguably never been stronger. When discussing the shifting environment with our members, it is clear that the common thread for both shortand long-term decision-making, along with the greatest areas of uncertainty and opportunity, is sustainability. From preparing for Task Force on Climate-Related Financial Disclosures (TCFD) reporting through to building diverse and inclusive boards and management teams, sustainability and its many inputs – not just ESG – will be at the heart of what makes our economy successful in the coming decade.

OUR MEMBER BASE … PRESENTS US WITH A SIGNIFICANT OPPORTUNITY TO BOTH ADVOCATE FOR AND LEAD DISCUSSIONS ON HOW OUR INDUSTRY CAN CREATE A MORE SUSTAINABLE NEW ZEALAND.

Within INFINZ we recognise that our member base is broad and, uniquely, touches every part of the financial ecosystem. This presents us with a significant opportunity to both advocate for and lead discussions on how

our industry can create a more sustainable New Zealand. We have recently expanded the Advocacy Committee to include members of academia and industry to help us focus on core, forward-looking priorities, with feedback from members. A current focus is on amplifying the role of finance in sustainability initiatives – exploring topics where we can make a difference and proactively raise ideas and create debate on where the finance industry can do more to help drive New Zealand forward. This is a new step for INFINZ, and we are excited to see the knowledge and leadership within our membership leveraged to ensure the broader finance sector is best placed to lead the sustainability shift. The Advocacy Committee looks forward to engaging more deeply with members over the coming months to ensure your views are being considered by officials and Government as we accelerate into this area. I would also like to acknowledge my colleagues on the Advocacy Committee: Dr Sebastian Gehricke, Michael Webb, Sue Walker, Dr David Tripe and Ross Pennington. Lastly, on behalf of INFINZ I would like to thank the outgoing chair of the Advocacy Committee, Ross Pennington. His contribution to not only strengthening our organisation but also ensuring our members’ views are heard has been immense. n

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NOTED

Updates on ELG, YWF and YFP activities in the past six months

L-R REBECCA MATTHEWS, DAN MARSHALL, MICHAEL CHATTERLEY, LOUISE MARSDEN, WARUNA KARUNARATNE

YFP WELLINGTON

THINK BIG Gaining insights into the intricacies of infrastructure projects was the focus of a sold-out YFP Wellington event in June. The group hosted a panel discussion at the Bell Gully offices titled ‘Infrastructure: Funding and Financing in Practice’. The sector expert panellists were: Louise Marsden of Direct Investments at ACC; Waruna Karunaratne, investment manager at New Zealand Green Investment Finance; Dan Marshall, infrastructure procurement and advisory specialist at PwC; and Michael Chatterley, commercial and financial lead of the Three Waters Reform Programme at the Department of Internal Affairs. Moderating the discussion was Rebecca Matthews. Daryn Govender, immediate past chair of YFP Wellington, says valuable insights on infrastructure funding and finance from several angles, including the public and private sectors, were provided. These included a closer look at key Kiwi infrastructure issues, including the Infrastructure Funding and Financing Act 2020, which enables the Infrastructure Levy Model,

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THE PANELLISTS EMPHASISED THAT INFRASTRUCTURE IS A DIVERSE FIELD, OFFERING MANY OPPORTUNITIES FOR YOUNG PROFESSIONALS TO USE THEIR SKILL SETS TO HELP ACCELERATE NEW ZEALAND’S GROWTH.

designed to support new infrastructure for housing and urban development. The Three Waters Reform Programme, which is reforming central and local governments’ approach to delivering our three critical water networks – drinking water, stormwater and wastewater – was also examined, as was New Zealand Green Investment Finance’s $300 million capital injection to support decarbonising New Zealand’s economy. From a career-development perspective, the panellists emphasised that infrastructure is a diverse field, offering many opportunities for young professionals to use their skill sets to help accelerate New Zealand’s growth. Due to Covid-19 disruptions, the group had to postpone an evening event with speaker Andrew Bayly MP and now plans to reschedule this in the new year. A planned end-of-year quiz night held in conjunction with YWF Wellington has also been moved to 17 February, and will now be a 2022 welcome event.

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P H OTO G R A P H Y: S U P P L I ED

Despite Covid-19 disruptions, YFP Wellington has been busy in the past six months.


Y W F AU C K L A N D

HANDS UP Strengthening pathways for young women to develop careers in finance is the aim of a new YWF Auckland sponsorship. In June YWF Auckland became a sponsor of the University of Auckland Investment Club (UAIC) – a student club with around 900 members across various disciplines across the university, of whom a third are female. “As an alumni of the club myself, I was proud to see how the club has developed over time and its particular focus on encouraging diversity,” says YWF Auckland executive director Jennifer Chee. “This sponsorship aligns well with the INFINZ and YWF ambitions, and we are exploring further ways of partnering to give female students and graduates more exposure to the finance industry.

HAYLEY CASSIDY

For more information on YFP Wellington, or to offer feedback on the group’s offerings, email infinzyfpwellington@gmail.com or find the group on Instagram @yfp_wellington.

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The group also hosted some informal events for the YFP Wellington ambassadors, including a wine tasting, to build closer ties within the ambassador cohort. The group is looking to enhance its ambassadors programme in 2022 and improve its social media presence and communications to members. Govender says the group welcomes feedback from members and will continue to tailor its offerings to members so it can better serve their needs. The board farewelled Daryn Govender in November as he moves to Christchurch and BNZ, and welcomed new co-chairs Guy Hooper ( Jarden) and Michael Callaghan (RBNZ), alongside fellow committee members Mie Sasanuma (ACC) and Lourdaiz Ah Chong (Forsyth Barr). n

“We’re thrilled to also note bottom-up support for this initiative, with many YWF members participating as mentors on UAIC’s Women’s Mentoring Programme.” Also in June, YWF Auckland presented an event titled ‘How to Negotiate’ with featured speaker Hayley Cassidy, chief general counsel at BNZ. Recognised as an Emerging Leader at the 2020 INFINZ Awards, Cassidy shared her experiences and tips on effective communication, advocating for yourself and dealing with difficult conversations. Chee reports that around 70 members attended the event, and that the Q&A session was particularly lively, with interesting discussions covering personal biases, psychological safety and situational awareness. YWF Auckland held two events in November. The first, on 3 November, was a virtual panel event titled ‘Women in the Corporate World’, and featured speakers from Foodstuffs, Mastercard and Fliway Group. “We recognised that many YWF members are employed in financial services roles, but that they are curious to learn about the career pathways and transition


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Y W F AU C K L A N D opportunities in the corporate world,” says Chee. “Our experienced panellists discussed their personal experiences and key considerations and learnings along the way.” On 11 November YWF Auckland presented ‘Funding Female Founders’ in association with NZ Private Capital – a virtual panel event featuring female venture capital founders and investors. The panellists spoke about market trends, challenges and opportunities, and their approaches to assessing start-ups. Alongside these events, the group organised two rounds of its Random Coffee Generator series this year, where members are randomly paired to connect over coffee to expand their networks. There were just under 40 registrations per round, with the first targeted at Auckland members to facilitate in-person meetings, while the second round was open to YWF members nationwide, given that lockdown restrictions meant all coffee meetings would be virtual. The group also continued its ‘Spotlight On’ member interview series, with its latest article, featuring Shannon Bassett, being published in August. Despite many events going virtual in 2021, YWF Auckland membership has continued to increase, with an 11 per cent annual uplift driven by both student memberships and regular professionals under the age of 30. Throughout 2021, the YWF Auckland board has remained constant, comprising Rose He, Imogen Swain, Tarah Mohaghegh, Anthea Phipps, Amy Stevens and Ella Knoester. Chee says the board is now working on its events schedule for 2022, which will continue to include a mix of inspirational speaker events, soft skills development and networking opportunities. It will also look to partner with UAIC on a networking event in the first half of 2022. “We wish to thank all our members who took the time to complete our feedback survey in October, as it has provided us with valuable input and suggestions,” says Chee. “We look forward to 2022 and we hope to offer our members more in-person events then.” n For more information on YWF Auckland, visit linkedin.com/company/ywf.

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Y F P AU C K L A N D

L-R MARIUS VAN DER POL, JOE SULLIVAN, PAUL WILSON

FOOD FOR THOUGHT An update on YFP Auckland activities over the past six months. From the secrets behind New Zealand’s America’s Cup success to the emerging world of non-fungible tokens (NFTs) and CFOs’ career pathways, there was plenty of food for thought on offer to YFP Auckland members in the second half of 2021. That was despite prolonged Covid-19 restrictions continuing to affect the ability to hold in-person events. The group’s last in-person event was held at KPMG in May, where Emirates Team New Zealand members Paul Wilson, Joe Sullivan and Marius van der Pol spoke about the journey to winning the 2021 America’s Cup. They outlined the path from the team’s disastrous performance in San Francisco in the 2013 cup race, through to changing boat designs and the evolution of the winning Kiwi boat, Te Rehutai, in 2021. Sullivan also spoke of his London Olympics gold-medal-winning performance, and Van der Pol of his journey from the New Zealand Army to Emirates Team New Zealand. In September the group hosted a virtual breakfast with former solicitorgeneral Mike Heron QC, who spoke about New Zealand capital markets and his wider career. Heron’s many roles have included director at NZX,

national commissioner of New Zealand Cricket and, more recently, chair of NFT company Glorious. NFTs use cryptocurrencies’ blockchains to sell original versions of digital artefacts, and Glorious has partnered with a superstar line-up of Kiwi talent – everyone from Six60 to The Estate of Rita Angus to Dan Carter – to create and trade digital works. The event was highly engaging, and well received, says Direct Capital investment analyst Kirsty Gradwell, co-chair of YFP Auckland alongside Hannah Port, a senior associate in capital markets at BNZ Markets. “Generally, the feedback from members is a preference for in-person events,” says Gradwell. “But online events have been a good way to stay connected with members during lockdown, particularly when they’ve focused on topics that are really relevant to current market trends, such as Mike Heron discussing NFTs and his career moves.” The group’s ability to attract highly regarded industry speakers to its events was also evident earlier in November at its online panel discussion titled ‘Pathways to CFO’. On the panel were Auckland Airport CFO Phil Neutze, Fisher & Paykel Healthcare CFO Lyndal York and XLCFO founder

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EMERGING LEADERS GROUP

NEXT STEPS An update on recent ELG activities, including the launch of the inaugural INFINZ Next Directors Programme.

and CEO Richard Chew, with Sarah Anderson-Butler, senior associate banking and finance at Bell Gully, as moderator. Despite the continuing Covid-19 disruptions, YFP Auckland membership increased from 314 to 330 (up 5 per cent) between May and October. The group’s board remained the same over that period, with members (alongside Gradwell and Port) being Rupert Curlett, Brad Davis, Giulia Dressler, Tom Gray and Tim Wilson. Port says prioritising getting together with ambassadors – representatives of the YFP and YWF groups in major firms – has been a great way to stay connected with members’ ideas and feedback. “The ambassadors are also each able to bring another person along to these events, so we’re constantly meeting and hopefully inspiring the next generation of board members and ambassadors across a wide range of roles in the finance industry.” At the time of writing, a final year-end social event – croquet in the sun at the Carlton Croquet Club – was planned for December, and Gradwell says the group hopes to rebuild the programme of in-person events in 2022. “We want to make sure our members are given the chance to meet their respective cohorts, as we’re conscious many have been working from home since March 2020. “We’re hoping for a return to stable and in-person events, as we know that networking is important for our younger members.” n For more information on upcoming events, visit infinz.com/Site/Events_Calendar.

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““WE SAW A GAP IN THE MARKET FOR A PERSONALISED PROGRAMME. THE APPLICATION PROCESS WAS OVERSUBSCRIBED AND WAS WELL RECEIVED, AND WE ARE STARTING TO PLAN A SECOND PROGRAMME FOR NEXT YEAR.”

Participants are paired with carefully selected industry mentors with governance experience, and hear from influential directors over the course of the programme. They’re also able to develop a broader industry network via the programme’s alumni, speakers and mentors. The programme is intended to run for six months; however, the timeframe of the first programme was extended due

to the Covid-19 disruptions. “We saw a gap in the market for a personalised programme,” says ELG chair Mei Zi Ho, who is a research analyst at Nikko Asset Management. “The application process was oversubscribed and was well received, and we are starting to plan a second programme for next year.” In an early programme session, participants heard from Lee Marshall – ELG board member and managing partner of finance industry recruitment firm Hunter Campbell – who shared insights on career direction and what to expect from the programme. The session also included a longer networking session, allowing the small number of participants to connect. The following session, titled ‘Governance 101’, was led by former EY People Advisory Services associate partner, now governance consultant, Kevin McCaffrey, who specialises in governance and change management with a focus on linking board and organisational culture. McCaffrey shared insights on board best practice, director obligations, and corporate governance principles and rules. Prior to the major disruptions to Auckland events caused by the pandemic, ELG hosted an event in May, with guest speaker Brad Olsen JP addressing the topic ‘New Zealand’s Productivity Poverty’. ELG extended an invitation to the event to all INFINZ members. A leading economics commentator and a principal ▲

P H OTO G R A P H Y: S U P P L I ED

L-R SAMANTHA WILLIAMS, KIRSTY GRADWELL

A personalised programme helping emerging leaders on their paths to senior leadership and governance roles has successfully kicked off, with another now planned for 2022. The inaugural INFINZ Next Directors Programme for finance industry professionals aged 28–45 was launched mid-year. The programme is aimed at those looking to add value to boards and senior management, those preparing for senior leadership and governance roles, as well as people who are at the start of their governance careers and wish to develop their capabilities further.

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NOTED EMERGING LEADERS GROUP

Y WF WELLINGTON L-R KATIE DAVIS, KIM MARTIN, KATE LE QUESNE, SARAH VREDE, RACHEL COATES

TAILOR MADE

BRAD OLSEN

economist and director at Infometrics, Olsen discussed whether New Zealand’s policy responses to our low productivity levels are appropriate. He also shared insights into what other countries have done better, why New Zealand as a whole isn’t focused on improvement, and what the longer-term outcomes of this are likely to be. The ELG has also had to reschedule a year-end panel to 15 March 2022, which will focus on private equity and alternative exchanges. Facilitated by Mei Zi, the panellists will include Catalist founder and CEO Colin Magee, Syndex CEO Ross Verry, Snowball Effect founder and CEO Simeon Burnett, and Armillary Private Capital joint managing director David Wallace. The make-up of the ELG board has remained constant in 2021, with members alongside Mei Zi Ho being Lee Campbell, Benjamin Coleman, Richard Milsom, Daniella Bossard, Richard Campbell and PJ Cairns. n If you are interested in joining the second cohort of the Next Directors Programme, stay tuned for details on the INFINZ website or contact ELG board chair Mei Zi Ho for further details: meizi.ho@nikkoam.com.

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At its ‘Women in Financial Markets in the Public Sector’ event held in June, YWF hosted panelists Sarah Vrede (FMA), Kate Le Quesne (RBNZ) and Kim Martin (Treasury), who provided insights into what the finance sector looks like in the public sector world. “We wanted to deliver something that was tailored to the Wellington demographic, given that a fair number of our members work in or interact with government,” says YWF Wellington executive director Rachel Coates, who is an FX forwards trader at ANZ. “We had a strong turnout for this event, as well as great questions and discussions on how the market has changed over time, and some of the key features that distinguish public sector roles from those in the private sector.” For example, the panellists noted that while public and private organisations look quite different in terms of their purposes and objectives, both sectors value highly skilled technical professionals. All three women mentioned they enjoyed the responsibilities and challenges that came with running the Crown balance sheet in New Zealand. The panel discussed a key shift

in focus in financial markets in recent years towards sustainable finance. In the 1980s, the ‘wave to ride’ was options – an area in which many worked and thrived, the panelists noted; now it’s ESG and sustainable finance. The women also discussed the evolving role that technology has played in finance over the past few decades, and will continue to play in shaping the sector as technology gets smarter. While a later ‘Career Journeys’ roundtable workshop and networking event planned by the group in August was thwarted by Covid-19 disruptions, the group is now looking to offer this in the new year. A planned end-of-year quiz night held in conjunction with YFP Wellington has also been moved to 17 February, and will now be a 2022 welcome event. Alongside Coates, the YWF Wellington board comprises Kate Le Quesne, Madhura Banerjee, Rachel Baxter, Katie Davis and Samantha Pereira. Looking ahead to 2022, Coates says the board is already working on plans for the group’s annual International Women’s Day event, with Kiwi Wealth acting CEO Rhiannon McKinnon scheduled as keynote speaker. n

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P H OTO G R A P H Y: S U P P L I ED

The impacts of changing technology and the shift towards sustainable finance were among the areas reflected on by public sector finance leaders at a major YWF Wellington event.


TO BUILD A

BETTER TOMORROW WE NEED TO

ACT TODAY We’re the market leader in Sustainable Finance in Australia and New Zealand.* If you want a partner to help you achieve your sustainable finance ambitions, speak to us today.

anz.co.nz/institutional *KangaNews AU + NZ Sustainable Bond Cumulative League table – including self-led deals, from 1 January 2014 – 31 October 2021. ANZ Bank New Zealand Limited 11/21 18748


Q&A: ROB EVERETT

THE START-UP GUY The FMCA was just getting off the ground when Rob Everett was appointed the FMA’s second chief executive in 2014. Prior to his departure from the role near the end of 2021, Everett shared his reflections on changes he observed during his seven-year tenure. Interview by Caitlin Sykes. THE FMA WAS in its infancy when you were appointed its chief executive. How have you enjoyed the intervening years? I’ve loved it. The FMA felt like a start-up when I got here and the legislation we’re operating under had just passed. We were doing most of the things we do for the very first time, so there was a lot of learning. It was quite intense, but it made life very interesting. If you roll forward to now, we’re still doing many things for the first time, and we are seeing change in our remit and the markets we operate in, so the learning hasn’t stopped, but it feels like a more mature, more confident organisation. It’s hard to leave actually, because I’d love to be involved with some of what’s ahead of us, but I’ll have to watch from a distance. Your new role, starting next year as CEO of NZ Growth Capital Partners, is anchored in the start-up space. Was that part of the appeal? That was one of the attractions: the ability to help organisations – ones very different from the FMA – that are in their early stages, navigating capital raising and growth. I probably wouldn’t have seen myself as a start-up guy 10 years ago, but certainly the FMA was pretty small when I arrived and we’re well over twice the size now with around three times the funding, so it has been a constant growth story.

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You’ve talked about the importance of culture in driving conduct, and how that needs to be industry led. How have you seen this evolve? Most boards we speak to are having much more granular conversations about this than they were five or six years ago. There’s a willingness to move culture and conduct beyond being just an occasional board agenda item or a bunch of well-meaning, well-intentioned principles to actually trying to ‘get under the hood’. Boards are trying to understand what core processes and data need to change, and what they need to look at to tell them if they’re moving in the right direction or if things are going wrong. None of that’s easy, but from where I sit it’s good to be struggling because if a board thinks it has it all under control, chances are it hasn’t realised how hard it is to do – particularly in a large organisation. We’ve also seen a lot of the industry go back and scrub their legacy products – examining how they were offered and sold and how they’re operating now. That’s why you’re starting to see a whole wave of remediation from insurers and other financial

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How have you seen the wider finance industry mature during your tenure at the FMA, particularly around conduct? Firstly, I’d note the maturity of the FMA is reflected outside the building. The sheer range of things we’re trying to monitor and influence, and in some cases enforce, is very significant compared with when I started. While we don’t yet license banks and insurers, that’s coming.

Already we’re trying to have conversations – and in some cases they’re quite pointed – with those sectors about what we think conduct maturity looks like. As in all aspects of life, there’s the carrot and the stick. We’re trying to work with the industry to almost co-design what good conduct maturity looks like to make sure that operationally the industry feels it’s doable, it makes sense and it’s something that will serve customers better. However, for those sectors and organisations that we really don’t feel have properly got off the ground yet, we’re having some reasonably confronting conversations, and that’s part and parcel of being a regulator that is trying to change behaviour.


AS IN ALL ASPECTS OF LIFE, THERE’S THE CARROT AND THE STICK. WE’RE TRYING TO WORK WITH THE INDUSTRY TO CO-DESIGN WHAT GOOD CONDUCT MATURITY LOOKS LIKE TO MAKE SURE THAT OPERATIONALLY THE INDUSTRY FEELS IT’S DOABLE.

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Q&A: ROB EVERETT

WE WILL BE DEVELOPING OUR MONITORING CAPABILITY AND TRYING TO GIVE GUIDANCE ON WHAT ‘GOOD’ [CONDUCT] LOOKS LIKE. IT’S GOING TO BE CHALLENGING BECAUSE THERE ISN’T THAT MUCH EXPERTISE IN CLIMATE REPORTING.

services firms, which are admitting that some of what they were supposed to do they haven’t done, or they haven’t done as well as they should. The industry has a habit of setting and forgetting; a product that made sense in one environment, as long as it’s making money, just gets left to the side and the hard questions aren’t asked. A lot of what we’ve been doing with the industry – which has been difficult, but I think we’re making real progress – is saying you should be constantly going back and checking. Covid-19, of course, has been the mother of all challenges, and I take some heart from the fact that if you look across the different sectors of the industry, all really jumped to it in a crisis. You can pick apart the edges to argue if everything was done perfectly, but ultimately we didn’t have to push those in the industry. We felt they reacted immediately with a much-improved focus on how they could help their customers. That reflects an understanding that you can’t lose the confidence of your consumer base and expect to succeed. What role have you seen INFINZ playing in these changes? Industry associations can only achieve the sorts of things that organisations like INFINZ are achieving if the membership wants it; if they’re willing to empower them and resource them and support them in doing that. I often see the reach and influence of the industry associations as indicators of whether the relevant industry sector understands what needs to happen. Where you see an industry association that isn’t just constantly advocating for its members but is actually trying to help its membership deliver to customers and investors, and meet the expectations of regulators and the general public, I think you have an industry that is able to self-correct if necessary. INFINZ has done a really good job of taking forward some complex discussions and debates – things that are easy to say but difficult to do – so there’s real value added there. A focus for the industry going forward is the introduction of the climate-related disclosures regime, which the FMA will be monitoring and enforcing. What approach do you see the FMA taking with this? Most of the remit expansion we’ve previously

done has involved expanding our reach to a broader population – for example, into financial advice. The climate-related disclosures are different, however, because they’re new to everyone. Everyone will need to grow the capability together. That demands an acceptance at the FMA that we will have to be patient as everyone starts to build the processes required to make these various disclosures, get the right data, and scrub it to ensure it is fit for purpose. At the same time, we will be developing our monitoring capability and trying to give guidance on what ‘good’ [conduct] looks like. It’s going to be challenging because there isn’t that much expertise in climate reporting. New Zealand has chosen to be out ahead, certainly of most of the world, with this legislative regime. But again, if we do see areas where people have just shrugged and said, “That looks a bit too complicated, we’re not going to do that” or “We’re going to pretend to do it”, then obviously those people will experience slightly less patient interactions with us as the regime develops. What role do you see INFINZ playing to meet future industry challenges? One of the challenges for industry associations is finding that balance between representing various member organisations, which are actually competing with each other, and taking the industry forward as a whole. To me, INFINZ has a clear role in bringing together the different elements of the industry, to put those competitive instincts aside to work together. That’s challenging, because it involves distilling many views, but it can be really beneficial in helping the industry navigate with standard setters and monitoring agencies like the FMA and the Government. It provides a voice for the industry, particularly on things that aren’t really working or are difficult. I’m a passionate believer that communication is key. I’ve built and encouraged a leadership team that’s capable of having that engagement at senior levels of industry across a range of topics and sectors. I would encourage anyone in the industry to feel they can talk to the FMA, and know that the FMA is listening. That’s the legacy I’d like to leave. n

Samantha Barrass will commence her new role as chief executive of the FMA in January 2022.

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CRD EVENT

ACTION STATIONS At a recent INFINZ event, directors shared their insights into implementing climate-related disclosures at a governance level. NEW ZEALAND’S incoming climaterelated disclosures (CRD) regime is not so much about what your business is doing to the planet, says Lloyd Kavanagh, but more about what the planet, governments and markets are going to do to your business. The MinterEllisonRuddWatts senior partner shared the insight while facilitating a virtual panel event in November that focused on the governance and risk management sections of the proposed CRD standards, which were the first to be released for consultation. Michele Embling, chair of the XRB, which will be issuing the standards, was one of three senior directors who took part in the discussion. Also sharing their views and experiences of CRD were Julia Hoare – Auckland Airport, Port of Tauranga and Meridian director, and deputy chair of A2 Milk – and Mark Cross – Milford Asset Management chair and non-executive director of ACC, Xero, Chorus and Z Energy. Embling kicked off the commentary from the panellists by noting it is important that organisations don’t approach the new regime with a compliance mindset. “If they do that, they’ll miss the point... Sustainability is a business issue and it’s here now; reporting is the end of the journey.” She said the standards will closely align with the TCFD framework, and the XRB currently expects to issue four mandatory disclosures, along with guidance to help preparers comply with the standards, and sector-specific information. Questions commonly asked so far during consultation, she said, have been around materiality, who the standard will apply to, how internationally aligned the New Zealand standard will be, and how to access data, climate scenarios and sector guidance.

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“SUSTAINABILITY IS A BUSINESS ISSUE AND IT’S HERE NOW; REPORTING IS THE END OF THE JOURNEY.”

Like Embling, Julia Hoare emphasised that the benefits of CRD go much deeper than just reporting, by affording businesses opportunities to “really test our strategies to actually see how resilient we are to climate change”. As a business embedded in sustainability, Meridian has already been undertaking TCFD reporting for three years, she said, and has learnt a “phenomenal amount about the business in the process”. For example, when looking more deeply into extreme weather events, the business realised some of its dams required strengthening sooner than previously thought – a major issue, but one that, when addressed, made its asset base far more resilient than before. Auckland Airport, she said, is earlier in its CRD reporting journey, having issued its first TCFD report in 2020. Hoare said it began by preparing a gap analysis, the hardest part of which was “acknowledging you’re not going to fill all the gaps in the first year and further work will be required… but starting on the journey is the right way to go”. Importantly, she said, the process enabled all parts of the business to think about climate change, which

is critical to the process, whereas historically it has been the domain of sustainability teams. Mark Cross agreed that the onset of the regime is less about compliance “and more about the requirement to turn your mind as a director to arguably the biggest issue of our time”. He said that while CRD is new and complex, aspects of it will be familiar to businesses that are used to sharing their stories in ways that enable stakeholders, particularly investors, to better understand how to govern and create value in the face of risk. As a director of organisations that will be both preparers and users of the disclosures, Cross noted that CRD will play a significant role in the decisionmaking of fund managers. “Importantly, it gives businesses an opportunity to convince investors that they have robust plans to reduce emissions,” he said. “That will enable investors to support the continued ownership of those companies that are making progress in the energy transition, rather than just investing in low-emission companies or using the even blunter instrument of exclusion, which I don’t think is the right outcome for anyone.” n

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C L I M AT E C H A N G E R E P O R T I N G

LIVE THE CHANGE Financial organisations shared their climate-reporting journeys at an event held in Auckland in July. Caitlin Sykes reports. IN THE FACE OF climate change and other sustainability challenges, how will your organisation demonstrate its resilience? This was a key question posed at an Auckland event on 6 July, presented by INFINZ and the XRB and hosted by Westpac New Zealand, at which a range of organisations shared their climatereporting journeys. New legislation is expected to usher in a mandatory climate-related financial disclosure regime at the end of 2021. This will require listed companies and large Crown financial institutions, insurers, registered banks and managers of registered schemes with more than $1 billion in assets to report on climate change risks to their operations, and their responses to those risks. Some New Zealand organisations, however, have already been undertaking this work for a number of years, and shared some of their lessons at the multi-speaker event. April Mackenzie, chief executive of the XRB, which is developing the reporting standards, kicked off by providing the context for when, why and how the disclosure regime will be rolled out. Climate reporting will take New Zealand a step closer to a low-carbon future and a cleaner, safer planet for future generations, but importantly, she noted, “it also makes very good business sense”. Increasingly investors and consumers are demanding to know how companies are managing climate change risks and opportunities, and their proper management is therefore becoming key for a social licence to operate. The standards will be based on the Financial Stability Board’s Task Force on Climate-related Financial Disclosures (TCFD) framework, which outlines 11 disclosure areas across four topics: governance, strategy, risk management, and metrics and targets. Mackenzie noted that while the first reporting period is expected to commence on 1 January 2023, with the first reports issued around April 2024, it is anticipated that entities won’t be required to report on all 11 areas in fine detail from the get-go.

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“We’re going to have to go on this journey together,” she said. “The XRB’s goal is that in time we will get high-quality information that is decision-useful.” The NZ Super Fund began its climate strategy journey in 2016, and both its head of direct investments, Will Goodwin, and senior investment strategist Lucas Kengmana presented. Goodwin said addressing climate change risks and opportunities is essential given the NZ Super Fund’s mandate to help provide pension funds for generations of Kiwis to come. “These risks are real for us,” he said. “We effectively need to be thinking about tomorrow’s portfolio today.” Over the past four years the organisation has substantially decarbonised by reducing the fossil fuel reserves and emissions intensity in its portfolio. “The net impact of it is that the portfolio in those past four years has been $1 billion better off for that decision.” Kengmana said the NZ Super Fund made the call in 2020 to produce a report based on the TCFD framework as a way to test its climate strategy, collate information it had gathered on the topic, and ‘walk the talk’ as an investor. His first advice to others starting on the climate-reporting journey was “don’t panic”, as everyone is still learning in this space. Performing a gap analysis of the 11 disclosure areas, he said, is a good way to create the skeleton of a report, highlight gaps in existing strategy and set goals. Kengmana found setting targets to be the most difficult aspect of the process, he said, and it is important that organisations use metrics that fit with their climate strategies and ensure everyone is aligned with them. “Be as ambitious as you possibly can,” he also noted, “because expectations here seem to keep growing.” The event’s final speaker, Genesis Energy CFO Chris Jewell, placed his company’s climatereporting journey in a wider sustainability context.

“IT’S ABOUT SOCIETAL CHANGE – ALL THE LITTLE THINGS WE’RE GOING TO HAVE TO DO AS A GLOBE AND A COUNTRY TO ADAPT TO HOW WE NEED TO ACT DIFFERENTLY.”

WILL GOODWIN

L-R JIM MCELWAIN, STEPHEN HONG

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LUCAS KENGMANA

APRIL MACKENZIE

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P H OTO G R A P H Y: M A R C EL T R O M P

CHRIS JEWELL

Noting that climate reporting is important, Jewell added that “it’s about societal change – all the little things we’re going to have to do as a globe and a country to adapt to how we need to act differently”. Central to creating change, he said, is putting the company’s purpose of ‘powering New Zealand’s sustainable future’ at the heart of its strategy, with employees and customers the two most important stakeholder groups to take on that journey. This year Genesis aligned its sustainability goals with five of the United Nations’ Sustainable Development Goals and also signed up to the Science Based Targets initiative. Jewell noted that aligning with international frameworks makes conversations with stakeholders, such as investors, easier. Genesis was an early New Zealand adopter of TCFD-based climate reporting, and Jewell said approaching it as a value-adding exercise ensures that opportunities – as well as risks – are exposed. One of the most valuable parts of the process, he said, is running workshops with

asset owners to test the resilience of their plant against a range of climate scenarios. Other tips included establishing carbon accounting systems early and operationalising sustainability reporting as much as possible to keep track of sustainability commitments. Ultimately, Jewell said, creating a more sustainable world requires everyone to play their part by making many small changes in their daily habits – and that requires leadership. “If we want to live the change we think the world needs to make, we all need to be on that journey,” he said. n

A similar event was held in Wellington on 8 July, with Meridian Energy’s CFO Mike Roan joining the XRB and NZ Super Fund speakers who presented in Auckland. An event held in Christchurch on 15 April featured presenters from Orion NZ on its TCFD journey. All up, more than 300 people attended the three TCFD-related sessions.

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EQUITIES

SEA OF CHANGE Brandon Tai, NZX head of markets development, reviews market activity for the six months ending 30 September 2021.

Global markets continue to weather the storm of Covid-19; however, there is light at the end of the tunnel, a significant uptake in vaccination rates allowing the reopening of major economies. New Zealanders are continuing to adapt to a ‘new normal’, with restrictions on travel and low interest rates resulting in less offshore spending and a greater focus on spending money at home. This has correspondingly had a positive impact on the markets, with the S&P/NZX 50 trading up 5 per cent through the period. In the six months to 30 September 2021, the S&P/NZX 50 Gross Index lifted 5 per cent, capitalising on the strong growth of the start of the year. The strong performance of the New Zealand benchmark companies follows a tough earnings season, with earnings reports in the prior period not setting much confidence for the market. However, with many countries easing

lockdown restrictions and the prospect of global travel on the horizon, investors are becoming more comfortable with equity investments. NZX welcomed one equity listing through the period – trans-Tasman logistics business DGL Group, which raised $100 million through a dual listing IPO. DGL’s share price has now risen more than 200 per cent and it has become one of the best-performing companies during 2021. There have also been 12 new debt listings, totalling more than $3.5 billion, this year. Arvida Group’s first debt issue and Precinct’s first green bond showcased the option to diversify funding and continued the momentum around sustainable finance. Secondary equity capital raisings remained a strong focus for the domestic market, as listed companies sought to capitalise on opportunities in both the domestic and global markets.

INDEX CHANGES: FIVE YEARS/SIX MONTHS TO 30 SEPTEMBER 2021 INDEX

30 SEP 2016

30 SEP 2020

31 MAR 2021

30 SEP 2021

SIX-MONTH CHANGE

FIVE-YEAR CHANGE

S&P/NZX 50 (gross)

7372

11,812

12,488

13,279

6.33%

80.12%

S&P/NZX 50 (capital)

3539

4963

5195

5448

4.87%

53.96%

S&P/ASX 200

5478

5872

6828

7185

5.23%

31.16%

S&P 500

2168

3363

3972

4307

8.42%

98.66%

FTSE 100

6899

5866

6713

7086

5.55%

2.71%

Hang Seng Index

23,584

23,767

28,938

24,036

-16.94%

1.92%

SOURCE: NZ X

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SECONDARY MARKET TRADING: SIX MONTHS TO 31 MARCH 2021 & 30 SEPTEMBER 2021 SIX MONTHS TO 31 MAR 2021

ON-MARKET %

SIX MONTHS TO 30 SEP 2020

ON-MARKET %

Value traded ($M)

$25,985,266,660

64.35%

$28,019,531,340

60.69%

Number of trades

7,187,410

99.58%

7,898,300

99.61%

SOURCE: NZ X

MAJOR SECONDARY EQUITY CAPITAL RAISINGS: Q2 + Q3 2021 COMPANY

AMOUNT ($M)

QUARTER

DETAIL

Precinct

250

Q2 21

Placement + SPP

Radius Care

50

Q3 21

Placement + SPP

EROAD

350

Q3 21

Placement + SPP

IkeGPS

25

Q3 21

Placement + SPP

Plexure

20

Q3 21

Placement + Retail

Cannasouth

4.5

Q3 21

SPP

SOURCE: NZ X

Precinct (NZX:PCT) was the largest secondary raise, issuing $250 million through a placement and retail offer. EROAD (NZX:ERD) followed closely behind with an $80 million placement and share purchase plan, along with $20 million raised by Plexure (NZX:PLX) for the purchase of TASK, in order to diversify revenue and increase product portfolio. Radius Care (NZX:RAD) completed its first equity raise through the same class offer regime since its direct listing in December 2020, raising $50 million. The capital is being used to increase the company’s brownfields development pipeline and acquire two smaller aged-care facilities nearby.

SECONDARY MARKET DEVELOPMENT CONTINUES AT PACE

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Since early 2020, NZX and global markets have seen a surge in activity and liquidity, with investors riding the waves of volatility through the Covid-19 pandemic. Encouragingly, we have seen the elevated levels of 2020 continue

through 2021, and as at the end of September our key market metrics were in line with the same point in 2020. We saw a YTD traded value of $40.87 billion, up 0.82 per cent YoY, and trade volumes a healthy YTD average of 63,572 daily trades per day, up 41.9 per cent YoY. Overall, our onmarket liquidity continues to perform strongly, with the on-market percentage at 61.9 per cent YTD, tracking well up on historical averages. Meanwhile the overall trade execution size continues to drop and is sitting at $3419 YTD, down 25.7 per cent YoY. This tells us that we have reset the baseline for the secondary markets in New Zealand and investors are looking to NZX and our listed issuers for returns and see value in the product. A shift we are continuing to monitor is the level of trading across the major index rebalances of FTSE, MSCI and S&P. These events continue to drive increased levels of activity and liquidity as fund and asset managers look to track the major indices. Through the six months ending September

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EQUITIES

NZX DEBT MARKET LISTINGS: Q2 + Q3 2021 COMPANY

QUARTER

AMOUNT ($M)

SkyCity

Q2 21

175

ASB Bank

Q2 21

500

Precinct

Q2 21

55

Bank of New Zealand

Q2 21

550

Kiwi Property Group

Q3 21

150

Oceania Healthcare

Q3 21

100

Transpower

Q3 21

200

ANZ Bank New Zealand

Q3 21

600

Wellington International Airport

Q3 21

125

SOURCE: NZ X

2021 we saw $6.31 billion traded through rebalance days and accounting for 13 per cent of total value traded during this period. In particular, the S&P Global Clean Energy Index rebalance on 16 April was our fourth-largest trading day ever, with $1.45 billion traded across the day and more than $1 billion traded through the closing auction. NZX successfully implemented a trading system upgrade in early August 2021 – an exciting milestone, with the additional functionality expected to have a positive impact on on-market traded liquidity from later in 2021. We have worked closely with Nasdaq to deliver the upgrade through its Nasdaq Financial Framework (NFF) technology, which will replace the current X-Stream trading system with the Nasdaq ME (Matching Engine). The new system will allow enhancements across trade reporting functionality for negotiated deals, as well as the ability to offer negative yield trading in NZX debt products. Through the introduction of three new message protocols – Native, ITCH and OUCH

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– NZX can also provide differentiated access routes depending on clients’ needs. The Nasdaq upgrade provides NZX with a strong base to continue building the exchange’s secondary market, with ongoing enhancements helping to ensure a fair, orderly and transparent market. Upcoming changes that we will deliver are a Self-Match Prevention (SMP) functionality and an exchange-operated midpoint order book (NZX DARK).

DAIRY DERIVATIVES – NZ MILK PRICE DERIVATIVES ON A RECORD-BREAKING RUN During the past six months, volume traded reached 156,872 lots for NZX dairy derivatives, up 4 per cent on the previous six-month period. However, the market saw a quieter Q2 as a result of lower price outlooks as global supply began to overtake demand, Q3 volumes reached 93,404 lots. Open interest in September closed at 42,874 lots for Global Dairy Ingredients contracts and a record 24,500 lots for NZ Milk Price (MKP) futures and options. MKP futures and options reached a new monthly volume record in September at 3220 lots traded, 5.7 per cent up on the previous record month. MKP contracts have had a strong year, with 18,513 lots traded YTD, up 23 per cent on 2020 – almost reaching last year’s total volume traded with three months left in the year. This has been assisted by current attractive pricing for farmers to enter hedges, with prices reaching up to $8.35 per kilogram of milk solids in September. In April, NZX and Singapore Exchange (SGX) sealed a strategic partnership agreement to unlock and accelerate the distribution and growth potential of NZX’s dairy derivatives market. This followed a Heads of Agreement that was mutually signed in October 2020. This partnership will bring together the complementary capabilities of NZX and SGX to scale up market distribution and liquidity in the global dairy derivatives markets. NZX continues to engage with participants and end users on the implementation of NZX’s global dairy derivatives partnership with SGX, scheduled for Q4 2021. n

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ACCELERATING A SUSTAINABLE FUTURE FOR AOTEAROA We’re aiming to enable $10bn in sustainable finance by 2025, so our customers can help New Zealand become a thriving, inclusive and net-zero emissions economy.

JN16636

To find out more go to westpac.co.nz/sustainable-finance

Westpac New Zealand Limited.


MARKETS REVIEW

DEBT CAPITAL MARKETS REVIEW A roundup of the debt capital markets for the second and third quarters of 2021. Over the six-month period reviewed, as for the previous six-month period, all the fixed income indices showed negative returns, ranging between -0.96 per cent and -1.18 per cent. As shown in the graphs, these negative returns resulted from the sharp rise in interest rates over the period, although a tightening in spreads, particularly for corporates, partially mitigated the impact on investor returns.

INTEREST RATE MOVEMENTS Figure 1 depicts the five-year swap rate for the past 12 months. In the past six months it has continued to climb, albeit at a slower pace than in the preceding six-month period, opening at 1.13 per cent and closing at 1.88 per cent. This saw it return to levels last seen in April 2019. The curve has also flattened considerably, with the gap between the five-year and seven-year swap rates now similar to what it was a year ago (see Figure 2). Figure 3 depicts the extent of the lift in the curve during the six-month period. The short end has lifted by more than the mid and long end of the curve. This suggests that during the period the consensus has altered to see interest rates peaking moderately higher than previously thought, but of greater importance is that this will occur more quickly than was anticipated six months ago.

S&P/NZX DEBT INDICES 31 MAR 2021

30 SEP 2021

CHANGE

S&P/NZX Composite Investment Grade Index

5261.8

5209.7

-0.9%

S&P/NZX NZ Government Bond Index

1867.2

1848.2

-1.0%

S&P/NZX Investment Grade Corporate Bond Index

6000.4

5947.2

-0.8%

S&P/NZX Local Authority Bond Index

1852.0

1834.3

-0.9%

S&P/NZX Kauri Bond Index

2188.8

2162.9

-1.1%

S O U R C E : S & P D OW J O N E S

Figure 1: FIVE-YEAR SWAP RATE (12 MONTHS) 2.0% 1.8% 1.6% 1.4% 1.2% 1.0% 0.8% 0.6% 0.4% 0.2% 0.0% S EP ‘ 20

NEW ISSUANCE ACTIVITY Issuance for the combined 1Q and 3Q 2021 was more than $12 billion. This was a record issuance in a six-month period and more than twice that seen in the previous period. Kauris made up just under half of the total, and at $5.4 billion this more than doubled the issuance in the previous six months. Financial ($1.9 billion) and LGFA ($1.8 billion) were the next largest sectors, with the Financial sector seeing its biggest volume of issuance since 2019. Assetbacked securities had a record period, with $1.5 billion issued, reflecting an increase in both the number of issuers and investor demand for these types of exposure. The Corporate sector saw $1.1 billion issued, but it was the only sector to see a fall in issuance compared with the previous six-month period. Public sector issuance totalled $0.7 billion.

NOV ‘ 20

JA N ‘21

MAR ‘21

M AY ‘21

JUL ‘21

S EP ‘21

SOURCE: IRESS

Figure 2: FIVE- AND SEVEN-YEAR SWAP RATE DIFFERENTIAL

0.45% 0.40% 0.35% 0.30% 0.25% 0.20% 0.15% 0.10% 0.05% 0.0% S EP ‘ 20

NOV ‘ 20

JA N ‘21

MAR ‘21

M AY ‘21

JUL ‘21

S EP ‘21

SOURCE: IRESS

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Corporate issuance

Figure 3: SWAP CURVE HAS FLATTENED IN THE MID TO LONG END OF THE CURVE

Eight corporate issues were completed during the period; all are quoted on the NZX. Transpower raised the largest volume of funds through two five-year offers of $150 million each – and with more than $1.4 billion issued into the New Zealand market, the company has surpassed Infratil to be the issuer with the largest amount of publicly issued bonds in the New Zealand market. Infratil also refinanced a maturity by issuing $102 million of new 6.5-year bonds. Kiwi Property Group ($150 million), Precinct Properties ($150 million) and Oceania Healthcare ($100 million) all raised money. SkyCity issued the largest individual series of the period, a $175 million six-year issue, which was a return to the market after the early redemption of its first senior bond as part of a funding restructure (and equity raise) in response to negative Covid-19 impacts on the business. Wellington International Airport completed the final offer of the period with a second resetting 5+5 structure.

2.5% 31/03/2021

2.0%

30/09/2021

1.5% 1.0% 0.5% 0.0% 0CR

1YR

2YR

3YR

4Y R

5YR

6YR

7YR

8YR

1 0Y R

9YR

SOURCE: IRESS

Figure 4: ISSUANCE BY SIX-MONTH PERIOD IN THE PAST FIVE YEARS 10,000 8000

Financial issuance

6000

There were four issues from the Financial sector in the period, of which three were senior bonds. ASB Bank, having been absent from the market since August 2019, made a welcome return with a $500 million five-year issue in May. BNZ followed a month later with a $550 million issue, its first public issue since January 2020. Rabobank also executed a $200 million issue during the period. The highlight of the period was ANZ’s $600 million subordinated bond offer. This was the first bank capital instrument from one of the four major banks since 2016, following on from Kiwibank’s Tier 2 offer last year. It was also the largest bank capital issue since ANZ’s Upper Tier 2 offer in 2008. The offer was well supported by both retail and institutional investors.

4000 2000 0 M A R ‘ 17

SEP ‘ 17

Asset-backed

SEP ‘ 1 8

LGFA

(1 April 2021 to 30 September 2021)

M A R ‘ 20

SEP ‘ 20

Financial

MAR ‘21

SEP ‘ 2 1

Corporate

Figure 6: PUBLIC BOND MATURITIES/ REDEMPTIONS BY SECTOR ($M) (1 April 2021 to 30 September 2021)

CORPORATE 1102

KAURI 5415

FINANCIAL 1850

KAURI 2725

LGFA 1775

Asset-backed issuance

ASSET-BACKED 1510

PUBLIC SECTOR 710

CORPORATE 1719

FINANCIAL 2765

PUBLIC SECTOR 35

▲ S O U R C E : C R A I G S I N V E S T M EN T PA R T N ER S

SEP ‘ 1 9

Public Sector

Figure 5: PUBLIC BOND ISSUANCE BY SECTOR ($M)

There were three deals from the Public sector. Dunedin City ($110 million) and Housing New Zealand ($600 million) both issued in April. LGFA used a syndication to open its May 2031 bond with a $750 million offer.

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MAR ‘19

S O U R C E : C R A I G S I N V E S T M EN T PA R T N ER S

Public sector issuance

Unsurprisingly, given the record issuance in this sector, the number of issues and issuers in this market was greater than normal, reflecting an increase in market capacity in recent years. One of the more frequent issuers, Q-Card, accessed

MAR ‘18

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MARKETS REVIEW

RECORD OF DOMESTIC ISSUANCE (TRANCHES > $50 MILLION) Month Apr 21 Apr 21 Apr 21 Apr 21 May 21 May 21 May 21 May 21 Jun 21 Jun 21 Jul 21 Jun 21 Jul 21 Aug 21

Issuer Transpower New Zealand Dunedin City Treasury Q-Card Trust Housing New Zealand ASB Bank SkyCity Entertainment Group Precinct Properties NZ LGFA Bank of New Zealand MTF Pantera Trust Series 2021 Infratil Rabobank New Zealand Kiwi Property Group Q-Card Trust

Offer Structure Retailable Institutional Institutional Institutional Retailable Retailable Retailable Institutional Retailable Institutional Retail Institutional Retailable Institutional

Issue Rating AAAA AAA AAA AABBBAAA AAAAA A+ BBB+ AAA

Aug 21 Aug 21 Sep 21 Sep 21 Sep 21 Sep 21 Sep 21

Avanti RMBS Series 2021-1 Latitude New Zealand Series 2021-1 Oceania Healthcare Transpower New Zealand Resimac Prime Series 2021-1 ANZ Bank New Zealand Wellington International Airport

Institutional Institutional Retailable Retailable Institutional Retailable Retailable

AAA AAA AA AAA ABBB

Volume ($M) 150 110 90 600 500 175 150 750 550 249 102 200 150 120 60 60 280 197 100 150 255 600 125

Maturity 8 Apr 2026 18 Apr 2028 18 Oct 2028 4 May 2026 21 May 2027 28 May 2027 15 May 2031 8 Jun 2026 15 Dec 2027 28 Jun 2024 19 Jul 2028 16 Aug 23 16 Aug 24 16 Aug 25 13 Sep 2028 8 Sep 2026 17 Sep 2031 24 Sep 2031

NZDX Quoted TRP080

ABB090 SKC050 PCT030 LGF140 BNZ150 IFT310 KPG050

OCA020 TRP090 ANB170 WIA080

S O U R C E S : C R A I G S I N V E S T M EN T PA R T N ER S , K A N G A N E W S

the market twice, with issuances totalling $210 million. Other frequent issuers to re-access the market were MTF ($280 million), Avanti ($350 million) and Resimac ($300 million). Latitude also returned to the market after debuting in 2018 with a $250 million structure.

Kauri issuance Reflecting the large volume issued, there were 13 Kauri issues executed during the period from nine issuers. The Asian Development Bank accessed the market three times to raise $1.3 billion, including a 10-year issue. The World Bank and Kommunalbanken Norway issued $1 billion each, although the World Bank did it in a single issue as opposed to two by Kommunalbanken Norway. L-Bank had a small issue of $120 million, but it was notable for being in the market for the first time since 2017. The balance came from regular issuers KfW ($450 million), European Investment Bank ($250 million), International Finance Corporation ($600 million) and Inter-American Development Bank ($450 million).

Maturities/Redemptions Maturities of publicly issued securities (excluding asset-backed) totalled $8.6 billion, approximately 70 per cent higher than in the previous six months.

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KAURI ISSUANCE Month

Issuer

May 21

World Bank

Issue Volume Maturity Rating ($M) AAA 1000 10 May 2028

May 21

Kommunalbanken Norway

AAA

450

14 Apr 2023

May 21

KfW

AAA

150

19 May 2028

May 21

Asian Development Bank

AAA

375

19 May 2031

May 21

Asian Infrastructure Investment Bank

AAA

250

14 Apr 2023

Jun 21

European Investment Bank

AAA

250

16 Jun 2028

Jun 21

Kommunalbanken Norway

AAA

550

14 Apr 2023

Jul 21

L-Bank

AA+

120

14 Apr 2023

Jul 21

KfW

AAA

250

7 Mar 2023

Jul 21

International Finance Corporation

AAA

600

27 Jul 2026

Jul 21

Asian Development Bank

AAA

220

30 May 2024

Aug 21

Asian Development Bank

AAA

750

6 Aug 2026

Aug 21

Inter-American Development Bank

AAA

450

26 Aug 2026

S O U R C E S : C R A I G S I N V E S T M EN T PA R T N ER S , K A N G A N E W S

Nearly a third of maturities were Kauris ($2.8 billion), with the Financial sector contributing a similar volume. The remaining maturities were from the Corporate sector ($1.8 billion) and Public sector ($0.0 billion). Combining issuance and maturities shows that the Corporate and Financial sectors both saw net maturities, whilst the other sectors saw net issuance. n

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CRD MASTERCL ASSES

A PRACTICAL APPROACH A new masterclass series will help members get hands-on with climate-related disclosures. How do you reduce your emissions? What is a risk screening and assessment? What do investors look for in climaterelated disclosures (CRD)? These are just some of the questions participants will explore in a new INFINZ masterclass series focusing on CRD. CRD will soon be obligatory for New Zealand’s 200 largest financial enterprises and listed companies, with reporting periods starting on or after 1 January 2023. Over time, it is expected that CRD will be voluntarily adopted across the whole market in response to investor, staff and wider stakeholder requirements.

To help members with the practical application of the core elements associated with the CRD journey, INFINZ is holding a series of CRD masterclasses in early 2022. They build on thoughtleadership events undertaken in 2021. The masterclass series aims to move the conversation beyond ‘compliance’ to one that challenges attendees to address the climate emergency from a strategic perspective. The objective of each masterclass is to share practical and applied knowledge and ‘learn by doing’. Content will be interactive, with exercises that provide sufficient depth to enable practical application.

Experienced responsible investment and corporate sustainability consultant West Nine Consulting director Erica Miles has compiled and will MC the masterclasses. Miles was co-secretariat and co-author of the Sustainable Finance Forum Roadmap for Action ( January 2019 – November 2020) and is one of only two New Zealand-based approved independent verifiers for the Responsible Investment Association Australasia’s (RIAA) responsible and impact investment certification programme. Key topics in the masterclass series include those outlined in the table below.

T OP IC

CON T E N T

Overview: Introduction and getting started

• Why climate change is a financial risk. • What is TCFD/CRD and what does it seek to achieve? • The CRD journey – where to start?

Risk identification: Emission footprinting (including Scope 3) and reduction

• Getting your own house in order – footprinting 101. • How do you reduce your emissions?

Resilience: Introduction to physical risks

• What is a risk screening and assessment? • Key elements of a risk screening and assessment for physical risks. • How to recognise a good physical scenario analysis.

Risk integration and resilience to physical risks

• Integration into risk. • Financial impacts.

Resilience: Introduction to scenario analysis for transitional risks

• Definition of a scenario analysis. • Uses of a scenario analysis. • It’s not a ‘set and forget’ – things are changing. • What are the key transitional risks? • Key elements of a scenario analysis for transitional risks. • How to recognise a good transitional scenario analysis. • Risks and opportunities (leading into Masterclass 4) – integration. • Practicalities. • Corporate level.

Strategy and targets: Reducing your footprint, including through green buildings

• Benefits – why? • How to get started.

Metrics: CRD – putting this all together

• What investors look for in CRD. • What level of ambition are investors seeking in corporates’ business models? • Key metrics sought by investors.

• Risk modelling (banking angle). • Risk disclosures – what is enough?

• Applying to industrial properties. • Financed emissions.

For more details, please visit infinz.com/Site/what_we_are_offering/learningandevelopment/crd-masterclass/

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C FA S O C I E T Y N E W Z E A L A N D

ESG COMING OF AGE Mary Leung and Sivananth Ramachandran discuss developments in ESG investing in the past decade and the key considerations in this growing field. THERE IS GROWING awareness of and demand for businesses to operate with objectives that go beyond building short-term economic value. An increasing number of investors are seeking products that are both sustainably managed and have positive impacts on society. As a result, the need for investment professionals with a firm grasp of ESG themes has never been higher.

Sustainable investing has gone from niche to mainstream For a long time after the first sustainable mutual fund – the Pax World Fund – was launched in 1971, sustainable investing remained a niche occupied by few investors. The 2015 Paris Agreement brought a greater focus on climate change, which in turn saw a noticeable shift of assets into sustainable products. This ushered in a period of fast growth, rapid change and occasional growing pains. Sustainable investing grew even faster after the Covid-19 pandemic intensified the scrutiny of ESG issues such as climate risk, social inequality, and board ineffectiveness. According to the biennial Global Sustainable Investment Review report, total sustainable assets under management reached US$35 trillion globally at the start of 2020, a 15 per cent increase from 2018. Other estimates suggest the dollar figure may be far higher, at around US$40 trillion.

Exchange-traded funds join the party Initially, sustainable investing was the purview of active strategies. But this is no longer the case. According to research and consultancy firm ETFGI, the total assets invested in sustainable ETFs and exchange-traded products grew 13-fold from US$25 billion in 2018 to a record US$327 billion as at the end of August 2021.

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Active ETFs are a promising new entrant to the ESG space. Although still rare, actively managed sustainable ETFs are worth watching.

A silver bullet? Amid the market turmoil in the second quarter of 2020, funds with ESG themes outperformed the market, and investors responded by shifting more assets into these products. However, they need to be cautious about interpreting this outperformance as evidence that ESG adds alpha. A 2020 BlackRock study of more than 1300 US active mutual funds found that funds with high ESG scores were exposed to traditionally rewarded risk factors, such as momentum, quality and low volatility. The contribution to alpha of the ‘pure’ ESG factor – isolated from the effects of other factors – proved insignificant. If pure ESG is an unrewarded factor, investors must scrutinise the fees they pay for ESG funds, evaluate other factor exposures in their ESG holdings, and examine the active risks they are willing to take to express their ESG preferences.

WEST WIND FARM, MERIDIAN ENERGY

Greenwashing As the demand for sustainable products grows, concerns are arising that some funds and companies are touting their ESG credentials without taking meaningful actions, a phenomenon known as greenwashing. Nowhere is this more salient than in climate change. Many companies make only superficial commitments to climate transition, while failing to report meaningful progress on carbon emissions. Since there are no universally accepted benchmarking standards for funds, climate accounting rules may allow them to get away with dubious claims about their portfolios.

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Disclosures and the role of exchanges AMID THE MARKET TURMOIL IN THE SECOND QUARTER OF 2020, FUNDS WITH ESG THEMES OUTPERFORMED THE MARKET, AND INVESTORS RESPONDED BY SHIFTING MORE ASSETS INTO THESE PRODUCTS.

To counteract greenwashing, investors need consistent and comparable ESG disclosures from funds and companies. The investment industry should adopt a standard disclosure framework for funds in a proactive and voluntary manner. The Global ESG Disclosure Standards for Investment Products that CFA Institute are developing is just one such effort in this area. Many exchanges play a key role in developing and monitoring disclosure standards for listed companies. They should use these standards to nudge capital markets toward a more sustainable economy. They can also help create sustainable indices to serve as appropriate benchmarks for evaluating the performance of ESG funds.

sustainable investing grows in size and scope, asset managers’ credibility in ESG is critical if they wish to capitalise on this trend.

CFA Institute Certificate in ESG Investing – the tools for ESG investment CFA Institute offers a qualification for investment practitioners to learn more about analysing ESG factors and integrating them into their day-today roles. The Certificate in ESG Investing covers a broad range of disciplines, including ESG valuation, engagement, stewardship, and how sustainable investing is reflected in the portfolio construction process. Find out more today. n

It’s only just begun Asia Pacific investors now increasingly ask for more ESG products and scrutinise the sustainability practices of their managers. As

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I N F I N Z AWA R D S

INTO THE LIMELIGHT A FRESH TAKE ON THE INFINZ AWARDS IN THEIR 20TH YEAR Research Report of the Year and Māori Leadership in Finance will be among a handful of new awards announced at the 2022 INFINZ Awards. IN RECOGNITION OF the 20th anniversary of the INFINZ Awards next year and to ensure the awards remain relevant, the INFINZ board has refreshed the awards programme. The two decades since the inception of INFINZ have seen many changes in the financial services industry, including growth in corporate finance practices and the introduction of KiwiSaver. There has also been significant innovation, including the development of retail investing platforms and increasing focus on environmental, social, and governance issues (especially issues of diversity, inclusion and climate change) and digital transformation. While many industry awards will remain substantially unchanged, some existing awards will have an expanded brief from 2022. And with a number of newly added awards, some will also be discontinued. We outline the details here:

NEW AWARDS IN 2022 • M āori Leadership in Finance – to acknowledge the achievements of Māori leaders in the financial services ecosystem.

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• M id-Market Transaction of the Year – for M&A and equity-raising involving entities valued at less than $250 million. • I nnovation in Financial Services – for the introduction of a new and enhanced service by any organisation within New Zealand’s financial services ecosystem that has created value for customers and the wider economy. • R esearch Report of the Year – to recognise and acknowledge excellence in published analytical research that adds insight to New Zealand’s financial services ecosystem.

EXISTING AWARDS WITH AN EXPANDED BRIEF

• E SG (incorporating the former Diversity and Inclusion award) – for initiatives that have advanced diversity/inclusion, employee wellbeing or New Zealand’s sustainability goals. • E xcellence in Institutional (and Corporate) Banking – for excellence in the delivery of banking products or services to organisations with sales in excess of $25 million per annum.

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• B est Investor Relations (incorporating the former Market Leaders and Emerging Leaders Investor Relations awards) – for excellence in investor relations for New Zealand-based organisations in the S&PNZX 50. • D iversified Growth Fund Manager (subsuming the NZ Equities and Best (NZ) Bond Fund Manager awards) – reflecting the growth in KiwiSaver balances, and that these funds need to be invested globally, including in New Zealand.

AWARDS SUBSTANTIALLY UNCHANGED FROM 2021 • D ebt Deal of the Year – for all debt transactions other than bond deals where securities are placed to New Zealanddomiciled investors (which are captured in the New Zealand Debt Market Issue of the Year Award). • E xcellence in Treasury – for initiatives that have resulted in improvements in or adaptions of the organisation’s own treasury practices. • L eadership – to recognise those leaders of NZX-listed corporates capitalised at over $400 million that have created sustainable value in the previous five years.

• E merging Leader – for an INFINZ member under 40 years of age who has demonstrated leadership qualities and contributed to the wider industry and community. • M ergers & Acquisitions Transaction of the Year – involving either sales of businesses or placements of significant minority shareholdings of New Zealand assets/ businesses, or acquisitions undertaken by New Zealand-controlled entities. • N Z Debt Market Issue of the Year – bond issues placed primarily to New Zealanddomiciled investors. • N Z Equity Market Transaction of the Year – for IPOs or placements of listed equity securities

DISCONTINUED AWARDS • B est Sharebroking Firm – there are new awards for mid-market transactions and innovation, for which these firms would also be eligible, alongside other organisations. • R esearch Analyst of the Year – their reports would be eligible for the Research Report of the Year Award, where they are publicly available, alongside those of other analysts. n

More details at infinz.com. Any further enquiries may be directed to Executive Director Jim McElwain at exec@infinz.com.

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New Awards for 2022 2 0 2 1 I N F I N Z CO N F E R E N C E

NZTE Te TohuAwards Kahukura Māori Leadership in Finance Award New for 2022 BDO NZTE Mid-Market Transaction of the YearinAward Te Tohu Kahukura Māori Leadership Finance Award BDO Fitch Ratings Mid-Market Transaction of the Year Award Innovation in Financial Services Award Fitch NZX Ratings Innovation in Financial Services Award Research Report of the Year Award NZX Research Report of the Year Award

Refreshed Awards Hunter Campbell

Refreshed Awards ESG Award Hunter Campbell Tax Management NZ ESG Award

Excellence in Institutional & Corporate Banking Award

Tax Management NZ Craigs Investment Partners Excellence in Institutional & Corporate Banking Award

*Best Investor Relations Award

Craigs Investment Partners Chapman Tripp *Best Investor Relations Award

Building a more prosperous and productive economy while ensuring we’re environmentally and socially sustainable was the central theme of the 2021 INFINZ Conference.

Diversified Growth Fund Manager Award

Call for Submissions

Call for25Submissions Closing February 2022

Closing 25 February 2022

Chapman Tripp (submissions due 31 January for this award) Diversified Growth Fund Manager Award (submissions due 31 January for this award)

Unchanged Awards

Unchanged Awards Public Trust

BUILDING BLOCKS

Debt Deal Public Trustof the Year Award Debt Deal of the Year Award Bloomberg

Excellence in Treasury Award Bloomberg Excellence in Treasury Award Caldwell Partners *Leadership Award Caldwell Partners

HELD VIRTUALLY on 28 October, the 2021 INFINZ Conference attracted leading finance industry participants and commentators from both here and offshore as speakers on the theme ‘Regenerate – building an even better New Zealand’. Minister of Finance Grant Robertson set the tone for the day when he used the event as a platform to launch a new Crown Responsible Investment Framework, which underpins the Government’s pledge to deliver a carbon-neutral New Zealand by 2050. “We want the sovereign wealth funds [Crown Financial Institutions] that are in New Zealand to be leaders in the transition to a low-carbon economy, and we know that this is where the world is going,” said Robertson. The finance industry’s role in reducing social inequality and addressing persistent challenges such as housing affordability and child poverty was also in the spotlight, with leaders in the

*Leadership Award

University of Auckland Business School University Auckland Business School Emergingof Leader of the Year Award Emerging Leader of the Year Award

MinterEllisonRuddWatts

MinterEllisonRuddWatts M&A Transaction of the Year Award M&A Transaction of the Year Award

Guardian Trust

Guardian Trust Issue of the Year Award NZ Debt Market NZ Debt Market Issue of the Year Award

For more details about the refreshed For more details about the refreshed awards programme and critera go to

awards programme and critera go to https://www.infinz.com/Site/INFINZAwards/

https://www.infinz.com/Site/INFINZAwards/

PwC

PwC NZ Equity Market Transaction of the Year Award NZ Equity Market Transaction of the Year Award *Submissions are not required for these categories

*Submissions are not required for these categories

Māori economy sharing indigenous solutions already evident here. Ngāi Tahu Holdings director Kristen KohereSoutar, for example, noted that the idea of having a quadruple bottom line approach to investment is “inherently connected to culture”. Those who hold guardianship, or kaitiakitanga, she told the conference audience, “have an obligation to nurture and grow the collective”. Rounding out the day’s programme was The Great Debate, in which teams argued whether New Zealand should capitalise on new or traditional industries in the drive to meet our zero-carbon 2050 aspirations. Speaking for the winning team, Joanna Kelly, CEO of Toitū Tahua: Centre for Sustainable Finance, argued that new business models and industries were crucial for a more sustainable future. “Covid-19 has created the context in which radical systemic change is suddenly possible,” she said. “Risk and return are forever changed.” n

You can read our full coverage of the conference programme, written by Owen Poland, on the following pages. For more information, visit infinz.com/Site/INFINZConference.

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2 0 2 1 I N F I N Z CO N F E R E N C E

Building a more prosperous and productive economy while ensuring we’re environmentally and socially sustainable was the central theme of the 2021 INFINZ Conference.

BUILDING BLOCKS HELD VIRTUALLY on 28 October, the 2021 INFINZ Conference attracted leading finance industry participants and commentators from both here and offshore as speakers on the theme ‘Regenerate – building an even better New Zealand’. Minister of Finance Grant Robertson set the tone for the day when he used the event as a platform to launch a new Crown Responsible Investment Framework, which underpins the Government’s pledge to deliver a carbon-neutral New Zealand by 2050. “We want the sovereign wealth funds [Crown Financial Institutions] that are in New Zealand to be leaders in the transition to a low-carbon economy, and we know that this is where the world is going,” said Robertson. The finance industry’s role in reducing social inequality and addressing persistent challenges such as housing affordability and child poverty was also in the spotlight, with leaders in the

Māori economy sharing indigenous solutions already evident here. Ngāi Tahu Holdings director Kristen KohereSoutar, for example, noted that the idea of having a quadruple bottom line approach to investment is “inherently connected to culture”. Those who hold guardianship, or kaitiakitanga, she told the conference audience, “have an obligation to nurture and grow the collective”. Rounding out the day’s programme was The Great Debate, in which teams argued whether New Zealand should capitalise on new or traditional industries in the drive to meet our zero-carbon 2050 aspirations. Speaking for the winning team, Joanna Kelly, CEO of Toitū Tahua: Centre for Sustainable Finance, argued that new business models and industries were crucial for a more sustainable future. “Covid-19 has created the context in which radical systemic change is suddenly possible,” she said. “Risk and return are forever changed.” n

You can read our full coverage of the conference programme, written by Owen Poland, on the following pages. For more information, visit infinz.com/Site/INFINZConference.

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2 0 2 1 I N F I N Z CO N F E R E N C E

WAVE OF CHANGE How can we create a more prosperous and productive economy, while ensuring we’re environmentally sustainable? Speakers from across the 2021 INFINZ Conference programme addressed the question. “This is who we are, and we have to truly harness that when we’re out in the world.”

INDUSTRY TRANSFORMATION IS KEY

EMBRACING THE 2021 INFINZ Conference

“THIS IS A MASSIVE OPPORTUNITY FOR THE FINANCE SECTOR AND ONE THAT REQUIRES US ALL TO UPSKILL REALLY QUICKLY.”

32

theme ‘Regenerate – building an even better New Zealand’, Minister of Finance Grant Robertson used his keynote address to launch a new Crown Responsible Investment Framework. The framework applies to Crown Financial Institutions (CFIs) including ACC, the NZ Super Fund and the National Provident Fund. Robertson said, “We want the sovereign wealth funds [CFIs] that are in New Zealand to be leaders in the transition to a low-carbon economy, and we know that this is where the world is going.” The principles-based framework underpins the Government’s pledge to deliver a carbonneutral New Zealand by 2050. It requires the measurement and reporting of carbon footprint metrics – and the setting of ambitious carbonreduction targets for portfolios. Acknowledging that New Zealand has “a significant way to go” to meet its international commitments, Robertson said that “massive investment opportunities” exist to drive sustainable growth with the development of low-carbon technologies such as hydrogen. Describing New Zealanders as “innovators by nature”, he said that brand values will be more important than ever as the world begins to re-engage in a post-Covid-19 world.

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Pointing to the Three Waters Reform Programme as the type of system change needed to drive New Zealand forward with prosperity, Robertson said industry transformation is the key to breaking through the infrastructure deficits and productivity challenges that New Zealand faces. Those investment opportunities were not lost on the major bank CEO panel. With funding of more than $14 billion across the ANZ Group to help its customers lower emissions, ANZ New Zealand CEO Antonia Watson said, “This is a massive opportunity for the finance sector and one that requires us all to upskill really quickly.” ‘Walking the talk’ by replacing its fleet with EVs is one ASB Bank initiative to reduce corporate emissions. However, CEO Vittoria Shortt said many farmers face the much more “daunting prospect” of having to quantify their emissions by next year, and banks will need to be more carbon literate if they’re going to help their rural customers manage down the risk. Spark CEO Jolie Hodson estimated 5G benefits to be worth $6–9 billion and said technology will help people to work smarter and grow productivity. “5G will deliver new [use] cases around industrial automation, drones, smart cities and thinking about how we keep our people safe,” she said.

RESOURCE MANAGEMENT ACT AN ENORMOUS CHALLENGE While there are big opportunities in decarbonising transport, Transpower CEO Alison Andrews said that meeting decarbonisation goals by 2050 will also require 50–70 per cent more electricity and the Resource Management Act represents an enormous external challenge. “We are going to need new lines and new power plants and there are going to be environmental trade-offs.”

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2 0 2 1 I N F I N Z CO N F E R E N C E

“WE’VE GOT TO SUPPORT AT LEAST A LEVEL PLAYING FIELD FOR THOSE INDUSTRIES THAT ARE COMPETITIVE AND ARE LEADING IN DECARBONISATION AS WE DRIVE TO ZERO CARBON.”

JOLIE HODSON

ROSS TAYLOR

ALISON ANDREW

FRAN O’SULLIVAN

ANTONIA WATSON

WARWICK TAUWHARE-GEORGE

The drive to zero carbon could also have unintended consequences, according to Fletcher Building CEO Ross Taylor. He fears that businesses such as Fletcher’s Golden Bay Cement plant, which produces roughly half of New Zealand’s cement and underpins around 500 jobs, won’t be able to meet an increasingly demanding emission glidepath, despite having a carbon footprint that’s 6 per cent lower than the global average. “We’ve got to support at least a level playing field for those industries that are competitive and are leading in decarbonisation as we drive to zero carbon,” he said.

KAITIAKITANGA A PRIMARY CONSIDERATION In a Māori economy estimated to be worth around $68 billion, kaitiakitanga, or guardianship of the environment, is a primary consideration when it comes to investment. “The notion of being a sustainable business is,

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of course, inherent in the culture,” said Ngāi Tahu Holdings director Kristen Kohere-Soutar, who oversees an $8 billion portfolio of assets. Likewise, Ngāi Tai ki Tāmaki Trust CEO Tama Potaka said that “most of our mahi is in the kaitiakitanga space” where investment opportunities are analysed through a cultural lens. This considers environmental sustainability, carbon footprint and the impacts on waterways. For the Parininihi ki Waitotara Incorporation, which is based in Taranaki and owns around half a billion dollars worth of assets, including dairy farms, lowering the carbon footprint is also a key mandate. “Cows don’t play into that,” said CEO Warwick Tauwhare-George, adding that this is why the organisation is converting to sheep. A wave of change is being driven by young people, he said, and “if we don’t acknowledge it and don’t move with it, we’re going to get left behind”. n

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ENGAGED AND INVOLVED What will the ‘new normal’ look like in the global economy? And what will be required of those working in the finance and capital markets industry in order to adjust? Closer to home, Zollner said the recent tightening of monetary policy creates the risk of a hard landing in the housing market, although Tannenbaum said that household debt levels in the US are nowhere near where they were before the GFC.

POTENTIAL CONCERNS

“COVID ANYWHERE is a risk everywhere,”

ABOVE: SHARON ZOLLNER AND CARL TANNENBAUM, PICTURED IN CONVERSATION AT THE 2019 INFINZ CONFERENCE.

according to Northern Trust chief economist Carl Tannenbaum, who outlined a plethora of post-pandemic economic concerns in his now familiar conference Q&A session with ANZ chief economist Sharon Zollner. Top of mind were labour issues, disrupted and expensive global supply chains and rising inflation. “There’s a wage-price feedback loop that is getting stronger and stronger, which really questions the notion that all inflation is transitory,” said Tannenbaum. Describing the risks around China as “higher than they have been at any time in the last 20 years”, Tannenbaum believes that China is the leading candidate for stagflation. “If China does have a hard landing,” he said, “it would be entirely unpleasant for those of us who trade with them, and those of us who invest in global markets.”

“IT REALLY IS A NECESSARY TRANSFORMATION OF PLANET EARTH AND HUMANITY, AND FINANCIAL MARKETS NEED TO BE ENGAGED AND INVOLVED AT THE CORE OF IT.”

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Given the increasing involvement of central banks in issues such as climate change, both economists flagged concerns about the potential for ‘mission creep’. However, RBNZ governor Adrian Orr pushed back on the notion, saying a collective effort is needed to address climate change. “It’s about prudential regulation; it’s about money stability and financial stability,” he said. “You can’t have one without the other, and both are impacted by the economy and the environment it is built on.” Heaping praise on the financial sector for acting with “great integrity, urgency and courage” in supporting customers through the pandemic, Orr said the sector has an opportunity to “stand up” by allocating resources to ensure a smooth transition to a net carbon zero world by 2050. “It really is a necessary transformation of planet Earth and humanity, and financial markets need to be engaged and involved at the core of it.”

STRONG FUTURE FOCUS In his final appearance as FMA chief executive before taking on the CEO role at NZ Growth Capital Partners, Rob Everett says there will be a strong future focus on product disclosure around green bonds and ethical investments. The FMA will engage with the industry and be extremely patient where fund managers “make distinct efforts to get to whatever good [conduct] looks like”, but he says it will be less patient with those who don’t. “I look forward to New Zealand actually being regarded as a world leader in climate reporting.” n

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2 0 2 1 I N F I N Z CO N F E R E N C E

OPPORTUNITY TO INFLUENCE Housing affordability, child poverty and the digital divide are among a range of social issues New Zealand must urgently address. How is the finance industry playing its part in meeting these challenges? SOCIAL COHESION is a key issue for the banking sector as the nation recovers from the economic disruptions caused by Covid-19. Kiwibank CEO Steve Jurkovich told conference delegates that “the emotional bank account’s pretty overdrawn”– especially among young families – and “a lot more dexterity and a lot more partnership” is needed around explaining shared goals on issues such as vaccination. Questioning how the ‘unbanked’ are funding themselves in tricky times, Westpac acting CEO Simon Power said that “financiers need to think really carefully” about how to assist various parts of the economy as New Zealand moves out of the present phase of the pandemic.

ASSET INEQUALITY From the Government’s perspective, Minister of Finance Grant Robertson said the huge fiscal response to Covid-19 was “entirely the right thing to do”, especially given the catalytic role that the Crown has in supporting and protecting “those who are most vulnerable in our society”. Pointing to the recent creation of a Social Unemployment Insurance scheme and the Māori Health Authority, he said Covid-19 is a stark reminder of the importance of partnerships, strong institutions and strong frameworks in driving change in areas like child wellbeing and social inequality. However, asset inequality is “a problem decades-long in the making”, he said, and the $3.8 billion Housing Acceleration Fund and the National Policy Statement on Urban Development will provide more certainty for the private sector. “The Government is here to put the pipes in

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to make sure that the internal roads are there to facilitate the development.” For Fletcher Building CEO Ross Taylor, land is the “biggest lever” when it comes to solving the housing challenge. He said he advocates incentives like a holding tax for undeveloped land in residential zones. “You’ve got to open up more land, and that requires infrastructure more broadly, whether it’s roads, water, services or schools.”

THE MĀORI ECONOMY In the Māori economy, the focus is squarely on intergenerational protection and growth. “Our guiding principle is to improve the wellbeing of the Ngāi Tai nation through leveraging our endowments, talents and partnerships,” said Ngāi Tai ki Tāmaki Trust CEO Tama Potaka. Iwi might have different styles, he said, but they’re playing the same game. “How can we facilitate whānau through employment or supplier diversity to become healthy and wealthy over time?” he said. With Ngāi Tahu Holdings having so far distributed around half a billion dollars to its 78,000 members, director Kristen Kohere-Soutar said the idea of having a quadruple bottom-line approach to investment is “inherently connected to culture”. Those who hold guardianship, or kaitiakitanga, she said, “have an obligation to nurture and grow the collective”. As CEO of the Taranaki-based Parininihi ki Waitotara Incorporation, Warwick TauwhareGeorge said the collective model is also changing the landscape for the Māori economy.

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2 0 2 1 I N F I N Z CO N F E R E N C E

SIMON POWER

DAN HUGGINS

KRISTEN KOHERE-SOUTAR

STEVE JURKOVICH

VITTORIA SHORTT

TAMA POTAKA

“WE’RE OPEN AND WE’RE AVAILABLE. WE’RE AWARE, AND WE’RE COGNISANT OF THE NEED TO COME TOGETHER, COLLABORATE AND DRIVE REAL RETURNS.”

“We’re open and we’re available. We’re aware, and we’re cognisant of the need to come together, collaborate and drive real returns.”

DIGITAL EXCLUSION Spark CEO Jolie Hodson said that having a place to live is critical to people being able to prosper, but digital exclusion is also a concern. One in five Kiwi households can’t connect to the internet, so the “shift to a more high-tech/low-carbon future will require us to do that in a just way”. BNZ CEO Dan Huggins believes digital growth will “foster a more inclusive and connected future” but said more needs to be done to encourage diversity in the workplace. “You want people to belong, and you want

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ROSS TAYLOR

ROSEMARY VILGAN

them to come in to work and feel like they can be themselves.”

SOCIAL CHANGE Addressing inequality at a corporate governance level is essential, said Rosemary Vilgan, chair of the Commonwealth Bank Officers Superannuation Corporation. Large social issues, such as modern slavery, have begun to dominate the investment environment and Vilgan said it’s essential for businesses to have the right strategies, values and people. “Diversity of thinking really adds to this awareness of the social issues of the time,” she said, because it reduces the likelihood of unexpected ‘black swan’ events. Listening carefully and having a culture where it’s safe to speak up are also important, and she urged investment professionals to play their part in dealing with social change. “Within your company and externally you can be an amazing influencer – and that’s an incredible opportunity.” n

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NEW AND OLD ‘In building back better and achieving net zero emissions by 2050, should New Zealand focus on developing its traditional industries rather than creating new ones?’ This was the central question of The Great Debate, which rounded out the 2021 INFINZ Conference programme. THE INTRODUCTION of Christchurch International Airport CEO Malcolm Johns as “the tobacconist of climate change” set the tone for The Great Debate. Arguing for the affirmative, Johns said New Zealand should focus on developing traditional industries, not creating new ones, to achieve net-zero emissions by 2050. “The team of five million can’t risk our waka being divided into business class, premium economy and economy through a misguided attempt to reinvent that which has kept us all afloat for more than a century,” he said. Affirmative team leader Catherine Savage said, “Humans are to blame, but it is also clear that humans are the solution.” Arguing that Kiwi farmers have probably done more than any other farmers to mitigate their

“COVID-19 HAS CREATED THE CONTEXT IN WHICH RADICAL SYSTEMIC CHANGE IS SUDDENLY POSSIBLE. RISK AND RETURN ARE FOREVER CHANGED.”

CATHERINE SAVAGE

MALCOLM JOHNS

MARY-JANE DALY

TE PŪOHO KĀTENE

JOANNA KELLY

DAVID DARLING

THE TEAMS For the affirmative

Catherine Savage: independent director and investor Mary-Jane Daly: director, Kiwibank Malcolm Johns: CEO, Christchurch International Airport

For the negative

Te Pūoho Kātene: executive director, Te Pūtea Whakatupu Trust Joanna Kelly: CEO, Toitū Tahua Centre for Sustainable Finance David Darling: CEO, Pacific Edge

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carbon footprints, she said that the focus needs to be on tangible solutions to support existing industries. “And we’ve got to do it smoothly,” she said, “so we don’t take our economy off a cliff.” Rounding out the affirmative argument, Kiwibank director Mary-Jane Daly said traditional industries could be leveraged through mitigating emissions and everyone should take responsibility. “There is a role for all of us to be the kaitiaki to help us build back better and achieve net-zero emissions by 2050. After all, there is no vaccine for carbon emissions.” Leading the team for the negative, Te Pūtea Whakatupu Trust executive director Te Pūoho Kātene argued the need for step changes over incremental improvements and said we must be courageous and brave by embracing innovation to carve out niches in world markets. “It is our moral imperative to walk towards the fire, and incremental improvements will not cut it,” said Kātene. “Our ability to embrace transformative change will determine whether we follow the path of Kodak or Netflix.” Pacific Edge CEO David Darling said new technology will add the greatest value to our economy because digital businesses can get up and running quickly. “The cost of delaying the transformation until 2030 is non-linear, making the transition near impossible unless we start now,” he said. To meet expectations and grow New Zealand’s future with net-zero emissions, he said, “we need step changes with sustainable new technologies deployed at scale”. Rounding out the argument for the winning negative team, Joanna Kelly, CEO of Toitū Tahua: Centre for Sustainable Finance, said exponential (10X) business models are needed, along with new industries such as distributed energy, precision fermentation and digital classrooms. “Covid-19 has created the context in which radical systemic change is suddenly possible. Risk and return are forever changed.” n

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YEAR IN REVIEW

HERE AND NOW WHILE COVID-19 continued to pose challenges and cause disruption throughout 2021, the INFINZ community had opportunities to come together in person throughout the year. These included fantastic turnouts at the 2021 INFINZ Awards in May, our climatereporting events in July, and events run

by our reference groups in Auckland and Wellington. INFINZ would like to extend a huge thank you to all those involved in organising and participating in these events to support our community – and we look forward to many more opportunities to engage in 2022. n

2021 INFINZ Awards – 18 May GUESTS ARRIVING AT THE 2021 INFINZ AWARDS

L-R LIZ TAYLOR, CHRIS CUNNIFFE

P H OTO G R A P H Y: M A R C EL T R O M P

L-R INDER SINGH, ABHAY LAMBA, SURESH YAHANPATH

L-R CLAUDIA BOOTTEN, KELLY ROBINSON, BRETT MAXWELL

L-R MARCELLE ASHCROFT, SHIREEN JITHOO, AUDREY RUSSELL

L-R CRAIG WEISE, JASON PATRICK, LOUISE TONG

L-R TWEENIE HAYWARD-BROWN, SARAH TROTMAN, TEX EDWARDS

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L-R FRAN BURLEY, KIRSTY GRADWELL, MEGAN REEVES

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YEAR IN REVIEW

Climate Reporting, The Journey – 6 July, Auckland

P H OTO G R A P H Y: M A R C EL T R O M P

YWF Auckland, International Women’s Day Breakfast – 31 May

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STAYING CONNECTED

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For information on the many benefits of an INFINZ membership and how to join, please go to our website.

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